What is a severance package, and should you accept one?

| Mar 23, 2020 | Employment Law

Oftentimes when a person in Kentucky loses their job, their employer will offer them a severance package. It is important to understand the basics of severance packages, so you can decide should the time come to accept one, whether it is reasonable and if it is possible to engage in negotiations for a more appropriate deal.

Why do employers offer severance packages in the first place? Generally, it is not merely out of kindness to an employee who may have been caught off-guard by the layoff. Oftentimes, employers ask workers to sign documents stating the worker will not bad-mouth the employer, sue the employer or work with a competitor in exchange for the pay and benefits provided in the severance package.

Generally, the amount of pay offered in a severance package depends on how long you worked for your employer. For example, a severance package might include a week’s worth of pay for each year you were employed. It is up to the employer whether to offer this payment as a single lump sum, or to offer a certain amount of money to be paid out over a certain time period. Oftentimes health insurance coverage for a specific time period is also made part of a severance package.

This is only a brief overview of severance packages, and workers who are presented with one may want to decide whether they need to seek legal advice before signing or accepting anything, which this post does not provide. Negotiating a better deal or deciding whether the offer is fair is a personal decision and workers facing such situations may want to pursue the help they need to ensure that an appropriate result is reached.